If you are considering an investment in hardware and/or software for your business, there are strong tax incentives to act now before special tax incentives expire at the end of 2013.
Congress has extended and enhanced the Section 179 tax deduction and bonus depreciation until 12/31/2013 in an effort to stimulate the economy and lower unemployment. These incentives offer businesses the opportunity to invest in hardware and software and quickly recover those costs.
Section 179 of the IRS Tax Code allows a business to deduct, for the current tax year, the full purchase price of hardware and off-the-shelf software that qualifies for the deduction. The equipment purchased must be within the specified dollar limits of Section 179, and the equipment must be placed into service in the same tax year that the deduction is being taken (for tax year 2013, this means the equipment must be put into service between 01/01/2013 and 12/31/2013). The deduction is available even if you finance the purchase - allowing you to capitolize on the tax savings while preserving your operating cash.
An overview of Section 179 tax incentives are:
- Section 179 Deduction Limit: $500,000 on hardware and software
- Section 179 Deduction Threshold: $2,000.000 is the maximum amount that can be spent of equipment before the Section 179 available deduction is reduced.
- Bonus Depreciation: 50%, applies to new equipment purchasing exceeding $500,000
Below is an example of Section 179 at work:
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* Beringer Associates, Inc. does not provide nor offer tax or accounting advice. Be sure to consult your tax advisor to confirm how to take advantage of this very generous tax incentive.